About the Gratuity Calculator
Our Gratuity Calculator helps employees estimate the gratuity amount they're entitled to under the Payment of Gratuity Act, 1972. Gratuity is a lump sum benefit paid by employers to employees who have completed at least 5 years of continuous service.
How the Calculation Works
The mathematical formula used by this calculator is: Gratuity = (Last Drawn Basic + DA) × 15 × Years of Service / 26. For employees covered under the Gratuity Act: Gratuity = (Basic + DA) × 15/26 × Years of service. The factor 15/26 represents 15 days' wages for each year of service (26 working days in a month). Service of 6+ months in the last year is rounded up. Maximum gratuity is ₹20 lakh (tax-free).
Key Benefits
- Know your gratuity entitlement
- Plan retirement finances
- Understand tax implications
- Verify employer calculations
- Negotiate CTC better
Frequently Asked Questions
What is the gratuity calculation formula in India?
Gratuity is calculated using the formula: Gratuity = (Last Drawn Basic + DA) × 15/26 × Years of Service. The factor 15/26 represents 15 days pay for each year, with 26 working days per month. Example: Basic+DA of ₹50,000/month for 5 years = ₹50,000 × 15/26 × 5 = ₹1,44,231. Service of 6+ months in the last year is rounded up to the next full year. Use the free Gratuity Calculator on AbacusHand to calculate your exact result instantly.
What is the minimum years of service required for gratuity in India?
Under the Payment of Gratuity Act 1972, an employee must complete at least 5 continuous years of service to be eligible for gratuity. However, the 5-year condition is waived in cases of death or permanent disability — in such cases, gratuity is paid regardless of years worked. The gratuity act covers organizations with 10 or more employees. On a basic of ₹40,000 with 5 years service, gratuity = ₹1,15,385. Use the free Gratuity Calculator on AbacusHand to calculate your exact result instantly.
How much gratuity will I get on a ₹50,000 salary for 5 years?
On a last drawn Basic+DA of ₹50,000/month with 5 years of service: Gratuity = ₹50,000 × 15/26 × 5 = ₹1,44,231. For 10 years service: ₹2,88,462. For 15 years: ₹4,32,692. The maximum gratuity payable under the Act is ₹20 lakh (tax-free). If your employer calculates a higher amount based on their own policy, the excess above ₹20 lakh is taxable. Use the free Gratuity Calculator on AbacusHand to calculate your exact result instantly.
Is gratuity taxable in India?
Gratuity up to ₹20 lakh is completely tax-free for employees covered under the Payment of Gratuity Act. For government employees, the entire gratuity (including above ₹20 lakh) is tax-free. For private sector employees covered under the Act, any gratuity exceeding ₹20 lakh is taxable at your applicable income tax slab rate. Gratuity received on death or disability is fully exempt from tax regardless of the amount. Use the free Gratuity Calculator on AbacusHand to calculate your exact result instantly.
What is the Payment of Gratuity Act and whom does it apply to?
The Payment of Gratuity Act 1972 applies to factories, mines, oilfields, plantations, ports, railways, shops, and establishments with 10 or more employees. Once applicable, it continues even if employee count drops below 10. The Act mandates payment of 15 days wages per year of service on termination, resignation, retirement, or death after 5 years. Maximum ₹20 lakh is payable. Non-payment is an offence — employees can file complaints with the Controlling Authority. Use the free Gratuity Calculator on AbacusHand to calculate your exact result instantly.